Is it possible to embed a youtube video in your application, but rather than showing the user a preview thumbnail that can be touched, show a standard UIButton that loads the video directly into the actual youtube player when touched. After the user clicks done control would return to my application (as it does with embedded webview) Is this possible?

This approach will take you out of your app and open native Youtube app. I don't think there is any thing available in youtube player options to hide thumbnail. For autoplay without tapping UIWebView please read answers for thisthis and this